Infrastructure investments positive for civil engineering

Local market, which represents more than half of net sales in business area Civil Engineering, works with landscaping and pipelines, foundation work and builds different kinds of facilities as well as offers services in power and electricity distribution. Infrastructure and heavy construction builds roads, railroads, bridges, tunnels and ports. Operation and maintenance handles national and municipal highways and street networks, tends parks and outdoor property as well as operates water and wastewater networks. The business area collaborates over regional and national borders to share in the development of core skills and to create scale advantages in larger and more complex projects.

The Business 2022

The markets in Sweden and Norway developed well in both Infrastructure and Local market in 2022. The level of orders received has been high with many projects of varying sizes. Public infrastructure investments were good in both Sweden and Norway and we received a number of new projects in Operation and maintenance but the global situation with price hikes for energy and vital input goods has affected operations. Peab continues to strengthen its position in civil engineering in Norway. In 2022 Peab acquired 90.4 percent of the shares in Arne Olav Lund AS based in Larvik. It had net sales of around NOK 300 million in 2021 and works in eastern Norway with production and improvement of roads, water and waste water along with groundwork and landscaping.

The level of orders received has been high in the business area with a substantial number of projects in varying sizes.

Roads and infrastructure

There is a big need for better infrastructure in the Nordic region, especially considering the ongoing sustainability transition. Public investments in Nordic infrastructure therefore continue to be high.

In 2022 Peab signed several contracts with the Swedish Transport Administration, among them rebuilding E45/Road 70 through Mora to augment passability for all road users and increase the roads’ capacity. Outside Karlskrona Peab is rebuilding E22 between Lösen and Jämjö into a freeway. The project includes lining the entire stretch with game fence and 23 bridges, of which several have fauna passages for animals and some are to promote leisure activities in the area.

Peab is rebuilding the lock canal in Södertälje for the Swedish Transport Administration. The lock canal is the largest Nordic commercial lock canal and rebuilding it is part of Mälarprojektet that will improve the maritime safety and accessibility of public shipping lanes through Södertälje Canal. The project includes replacing Sluss Bridge with a new openable bridge, exchanging the current lock gates for new ones that allow for a broader, longer canal. The project also includes building new premises for operating the locks and new roads alongside the canal.

Peab is rebuilding Kungsgatan in central Stockholm for the city of Stockholm. The street will be fortified so that it can handle future traffic while also making it more enjoyable and accessible. Peab is building a new main street in Skårersletta in Lørenskog Municipality. The new street will have broad sidewalks, new bicycle lanes and safer street crossings. Trees will be planted on each side of the street to separate pedestrians from car and bicycle lanes.

Local market

Civil Engineering has a strong position on the local market in Sweden. A whole new city borough is being built in Forsåker in Mölndal. Peab is working on culverting the river and building a visible river watercourse, with the associated bridges, through the area. In Linköping Peab is building the infrastructure for a new housing tract at Näsby. The project entails work on streets, rainwater, parks/nature, water and waste water, district heating, electricity, optical fiber and lighting. In Trollhättan Peab is preparing the way for an extension of a new wastewater treatment plant. Peab is responsible for the blasting to make room for a 140 meter basin hall with biological treatment of wastewater.

Operation and maintenance

During the year Peab won eight operation contracts for road maintenance from the Swedish Transport Administration for a total of about 8,500 kilometers of federal roads. The operation contracts run for four years with an option for another two in, among other places, Öland, Borlänge, Hedemora and Västbo. This means a 24/7 response for snow plowing and anti-icing in the winter and in the bare ground road season repairing roads, fixing drainage and installing road signs and road barriers.

Ports and seas

Part of the ongoing climate transition entails more environmentally-adapted freight carriage to and from ports. In recent years Peab has developed an expertise in port and seaside projects. Peab is building a new dock in Hargs Hamn for Östhammar Municipality. The port is a logistic hub that ties boat, truck and train transportation together and is the closest general port for bulk traffic north of Stockholm. Peab is building a 182 meter long embankment dock, making it possible for much larger ships to dock at the port.

Energy

Energy-related contracts are part of Civil Engineering’s operations, particularly wind power production where Peab is working with several installations. Peab’s subsidiary ATS Kraftservice won a number of framework contracts in 2022 for service and maintenance, construction and local electricity grid services for mainly Vattenfall, Eon and Öresunds­kraft in Skåne, the Stock­holm region and northern Norr­land.

In 2022 Peab turned over two newly constructed windfarms, one to RES with 35 wind turbines at Björnberget in Ånge Municipality and one in Hån, close to the Norwegian border, where Peab built five wind turbines for Cloudberry Wind (Hån Vindpark AB). Both the customer and Peab have been strived for minimal impact on nature in challenging topography.

Net sales

Net sales during 2022 increased by six percent and amounted to SEK 14,965 million (14,180). The increase is mainly related to Infrastructure and Operating and maintenance. Adjusted for acquisitions and exchange rate effects net sales increased by five percent. Net sales are well spread among different product areas.

Profit

Operating profit for year was SEK 494 million (471) and the operating margin was 3.3 percent (3.3). Prices for material and energy rose considerably during 2021 and 2022. We have handled the price hikes as well as delivery disturbances through adjusting and streamlining operations, but since we have not been able to completely compensate cost increases they have had a negative impact on the operating margin.

Orders received and order backlog

Orders received during 2022 increased to SEK 14,877 million (14,819). Orders received included rebuilding the lock canal in Södertälje for SEK 1.5 billion for The Swedish Transport Administration. Order backlog on December 31, 2022 amounted to SEK 13,939 million (13,955). Roads and other infrastructure generated the largest portion of order backlog at 40 percent (36).